According to the 8th ASEAN Energy Outlook (AEO8), energy demand in Southeast Asia is projected to almost triple from its 2022 level by 2050. Meeting this surge in demand will require ASEAN Member States (AMS) to accelerate efforts to diversify national energy mixes while deepening regional energy cooperation, particularly through cross-border power interconnection initiatives such as the ASEAN Power Grid (APG). The 18-priority interconnection list identified under the ASEAN Interconnection Masterplan Study (AIMS) presents a pathway forward, where in the future, inland and submarine interconnection could serve as a backbone to connect demand and supply epicentres across the region. However, its unique challenges, particularly regarding Environmental and Social Safeguards (ESG), during each stage of development, construction and operation are a matter of utmost priority. Failure to address such challenges may result in not only creating more disparity but also contributing to comparable, if not more environmental impact to that of carbon emissions from fossil fuels.
Both inland and submarine interconnection projects traverse multiple environmental and social contexts. Inland transmission lines typically pass through agricultural land, forests, and settlements, raising issues related to land acquisition, biodiversity loss, and community displacement. Submarine interconnections, on the other hand, extend across coastal and marine ecosystems, where cable installation and associated infrastructure may affect fisheries, seabed habitats, and coastal livelihoods. In many cases, these two systems are physically interconnected.
While regional interconnection is critical for enhancing regional energy security, disturbances arising from construction activities can trigger cascading socio-ecological impacts, affecting ecosystem services that support food security, and local economies around the designated project area.
For instance, the inland interconnection between Sabah and Kalimantan will undoubtedly cross or pass adjacent to environmentally sensitive areas such as the Serudong river and Mengilan forest, the issue then becomes two-fold when indigenous communities are involved.
In the identified interconnection route, the transmission line could also potentially cross over lands inhabited by the Dayak groups, the Murut, and the Tidung people. In cases of submarine interconnection, such as the interconnection from Peninsular Malaysia to Sumatera, will potentially present prospective dredging activities during its stages of construction, in this context the Akit tribe and migratory patterns of raptors surrounding the Rupat island will also potentially be disturbed.
Against this backdrop, ensuring a just and inclusive energy transition necessitates the adoption of a holistic regional guideline for an Environmental and Social Impact Assessment (ESIA). Doing so not only safeguards the very environment and society that the region holds its promises to, but to also increase project bankability ensuring timely and efficient delivery.
ESIAs are typically done on a project-specific basis, but they are regulated through national legal frameworks. In the case of cross-border energy infrastructure, one project could potentially need to comply with multiple national Environmental Impact Assessment (EIA) or ESIA requirements. Each country has its own set of legislative requirements, scope, and processes. Traditionally, EIA in ASEAN has been limited to biophysical impacts, including land use, biodiversity, water quality, etc. However, in countries such as Indonesia, Lao PDR, Myanmar, social, cultural, and livelihood impacts are integrated into EIA processes, effectively acting as ESIA.
The regional context is therefore a matter of non-equivalent ESIAs, rather than a lack of regulation, and this becomes particularly significant in the case of power interconnection, especially those that involve multiple complex environments. At present, there is no international or ASEAN-level ESIA system or guideline that is specific to both inland and submarine large-scale energy or cross-border power interconnection projects. Instead, the process of conducting an ESIA for large-scale energy or cross-border power interconnection projects is still governed by national regulator systems, without any regional references that outlines minimum requirements for environmental and social considerations, cumulative impacts, or trans-boundary risks.
For a region which considers cross-border grid connection to be paramount to its energy security, such a situation creates a structural barrier. In the absence of a commonly agreed regional guideline, projects are exposed to duplicated studies, misalignment between early-stage assessments and financing requirements, and rising transaction costs as they move from project preparation toward financial closure. The challenge for ASEAN, therefore, is not to replicate or replace existing national ESIA systems, but to establish a regional foundation, a minimum common ESIA ground for cross-border energy infrastructure.
Global experience suggests that the need for such regional frameworks typically emerges as a pragmatic response to growing project complexity rather than as an exercise in regulatory harmonisation. For instance, in the European Union, the development of the Environmental Impact Assessment (EIA) Directive and the strengthening of transboundary assessment provisions evolved alongside the integration of energy markets and cross-border infrastructure. These frameworks were designed to reduce regulatory fragmentation, clarify expectations among participating countries, and provide greater certainty for project developers and financiers, while preserving national discretion to apply more stringent domestic standards.
For ASEAN, the relevance lies not in directly adopting existing ESIA practices, but in recognising the increasing necessity for a common regional ESIA guideline as cross-border interconnection projects scale up under the APG. By aligning early-stage project preparation with guidelines that are broadly consistent with international financing requirements, such as the World Bank Environmemental and Social Framework (ESF), a regional guideline could reduce the need for repeated assessments at later financing stages, lower transaction costs, and improve overall project bankability. In developing this guideline, ASEAN can also draw from other cross-border infrastructure experiences, such as the Sistema de Interconexión Eléctrica de los Países de América Central (SIEPAC) for inland transmission across lush tropical jungles, and the Viking Link as a prime example of cross border submarine interconnection.
In this sense, a regional ESIA guideline would function not as an additional regulatory burden, but as an enabling building block – allowing seamless financing eligibility during phases of feasibility study. As ASEAN moves from planning toward implementation of cross-border power interconnections, the development of such a guideline is increasingly relevant to be positioned as a priority framework under the APG Enhanced MoU, supporting timely project delivery, safeguarding environmental and social outcomes, and ensuring that ASEAN’s energy transition proceeds in an efficient, equitable, and sustainable manner.
References:
- https://eyesontheforest.or.id/uploads/default/report/Eyes-on-the-Forest-Investigative-Report-PT-SRL-APRIL.pdf
- https://www.researchgate.net/publication/356954005_Species_Diversity_of_Marine_Bivalves_from_the_Strait_of_Rupat_Island_Riau_Province_Indonesia#:~:text=Bivalves%2C%20as%20filter%20feeders%2C%20can,society.
- https://www.sciencedirect.com/science/article/abs/pii/S0195925517304286
- https://circabc.europa.eu/ui/group/3b48eff1-b955-423f-9086-0d85ad1c5879/library/b7451988-d869-4fee-80de-0935695f67f2/details?download=true
- https://eur-lex.europa.eu/eli/dir/2014/52/oj/eng
